Time Prices

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In the past I have discussed the difference between absolute poverty and relative poverty. Absolute poverty is a matter of life and death, starvation or food, terminal sickness or medical care, and so on. The destitute simply do not have what is necessary to continue living, or they are always living on the edge between death and life.

But relative poverty functions on a sliding scale, which is why we don’t notice what is happening to us. There are people today in America who are living “below the poverty line” who are in possession of goods that Nebuchadnezzar would have given up to half his kingdom to possess—like a 2003 Ford F150 pick-up truck, an iPhone 9, and a mini-fridge for his chambers.

We have trouble being grateful for all of our blessings because we are blinded by two great optical illusions. The first is the illusion created by our tendency to compare one generation with another by juggling multiple currencies and economies and eras. When we think this way, how everybody was actually doing gets lost in the confusion. This is a problem that is solved by calculating the basics of life in time prices, which we will get to in a moment.

The second is the illusion created by technological innovation. Nothing can be done about this illusion except to recognize its presence, and to render thanks accordingly.

So let’s consider each of these in turn. What is a time price?

“The ultimate test and measuring stick of wealth is time. What remains scarce when all else becomes abundant is our minutes, hours, days, and years. Time is the only resource that cannot be recycled, stored, duplicated, or recovered. Money is most fundamentally tokenized time.”

George Gilder, foreword, Tupy and Pooley, Superabundance, p. 16. This is as good a place as any to mention that I am going to be quoting Gilder from Pooley’s book, and quoting Pooley from Gilder’s book. I would ask the reader to remember that such things could happen to anyone.

Rich men and poor men both get sixty seconds to a minute, sixty minutes to an hour, twenty-four hours to a day, and so on up the ladder. Calculating time prices means that we take the average amount of time it takes to “purchase” a particular commodity. When the time spent on an item shrinks, this means that the purchasers are consequently wealthier in real terms. And if the currency we are using is time, there is no inflation. A minute three hundred years ago is the same as a minute now.

“The single greatest breakthrough in 21st-century economics is the comprehensive and creative translation of prices into time—time prices. Time prices calculate the hours and minutes needed to earn the money to buy goods and services.

Gilder, Superabundance, pp. 16-17

Using time prices as a way of analyzing how economies work has multiple advantages.

“There are four reasons why time to measure the change in abundance is better than using money. Firstly, time-prices contain more information than money prices . . . Secondly, time-prices transcend all the complications associated with trying to convert nominal prices to real prices . . . Inflation adjustments are not necessary. Thirdly, time-prices can be calculated on any product with any currency at any time and any place . . . And finally, time is an objective and universal constant.”

Pooley, in Gilder, Life After Capitalism, p. 92

So let us take a concrete example. Translated into the aforementioned real terms, how long would an average worker need to work in order to buy an hour of light? Or a pound of flour?

“In his 1994 essay ‘Do Real Income and Real Wage Measures Capture Reality? The History of Lighting Suggests Not,’ for the National Bureau of Economic Research, Nordhaus concluded, ‘One modern 100-watt incandescent bulb burning for three hours each night would produce 1.5 million lumen hours of light per year. At the beginning of ‘last century’ [1800] obtaining this amount of light would have required burning 17,000 candles, and the average worker would have had to toil almost 1,000 hours to earn the dollars to buy the candles. In the modern era, with a compact fluorescent bulb, the 1.5 million lumen hours would need 22 kilowatt hours, which can be bought for about 10 minutes work by the average worker [in 1990],’ or six thousand times less.”

Gilder, Superabundance, p. 20

And for the purposes of this analysis, we are not even factoring in the quality of the light. I dare say that it was much harder to read by one of those candles than it is to read under a modern reading lamp.

What this means is that from one generation to another, we are growing steadily wealthier. Less time at work purchases more commodities, and of a higher quality. And getting to the point of this true comparison is not that difficult.

“All you need to do is divide number of hours of work into gross domestic product (GDP), however it is calculated. The result is the correct estimate in the rise in the standard of living. As Tupy and Pooley show, globally between 1980 and 2018, despite all the monetary noise and the cultural ‘headwinds,’ workers have been able to buy some 252 percent more goods and services with their hours and minutes.”

Gilder, Superabundance, p. 20

The reason we don’t notice this is that we are constantly glancing from side-to-side. Instead of marveling at how much better we have it than some poor guy in the sixteenth century whose candle is almost out, we are quick to notice the person across town in our lifetime who is better off than we are, a fact that we find grievous and not to be borne. He is has a big house on the top of the hill, and he leaves lights on all the time.

But all of our grievances are self-serving, and this is because envy does not run on good sense. If we compare ourselves globally in the present, we are part of the one percent. If we compare ourselves to the global population throughout all of history down to this point, we are part of the .00001%. And not only do we occupy that privileged position, we do so while feeling sorry for ourselves.

But there is a second factor mentioned earlier, and this is an area where time prices don’t help us out at all. This is because we cannot ask how many hours a man had to work in the 14th century to purchase his iPhone. When it comes to the many forms of wealth that accrue to us via technological innovation, there is simply no comparison. I am talking about things like digital devices, or airline tickets, or hot and cold running water, or Keurig coffee makers, or antibiotics. You couldn’t get a penicillin prescription in 1300 for love or money.

Put in terms of time prices, what now costs, say, 10 hours of labor to purchase, used to cost an infinite number of hours. Since nobody had that amount of time, they couldn’t buy one.

But there is one way that these two factors can be combined in a fruitful fashion. Because of technological innovation, and because the time prices of basic commodities have been going consistently down for centuries, this in its turn purchases something. We have been looking at how this progress has enabled individuals to purchase more for less. But collectively, what do these innovative devices and much cheaper commodities purchase?

What they purchase is a much larger population—that old bete noir of Thomas Malthus. But by this I do not mean so many more biological organisms standing around. More people means more knowledge—more innovation, and so forth. The Malthusians among us think of people as consumers. A more biblical way of thinking of them is as producers. God put us into this world with one mouth and two hands, which means a good ratio for everyone would be to produce twice as much as you consume. If that were to be the case, there could be no overpopulation.

A lot more people means an enormous increase in our central resource.

“The materialist superstition is this: that wealth consists of things rather than thoughts, of accumulated capital rather than accumulated knowledge—that people are chiefly consumers rather than creators, mouths rather than minds.”

Gilder, Foreword, Superabundance, p. 22